Chinese Premier Wen Jiabao said the government will focus more on bolstering growth, indicating policies may be loosened further as inflation moderates.
China will
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The biggest tech IPO in history took off like a slightly-delayed rocket this morning, with Facebook shares rising more than $7 to $45 in the first few minutes of trading, before falling back down to its launch price of $38 in the first hour of trading. So will the company be a long-term high flyer or will it just soars briefly before fizzling out?
The company
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Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank needs to be ready to raise interest rates even if joblessness exceeds 7 percent.
Speaking in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link, he said the Fed will probably have to raise rates in mid-2013. Adding more monetary stimulus now would raise inflation risks without doing much to boost growth, he said.
Unemployment
SHANGHAI
U.S. stocks were poised to open higher Monday as Fed chairman Ben Bernanke’s comments on the job market gave investors reason to believe interest rates will stay low.
The Dow Jones industrial average (), S&P 500 () and Nasdaq () futures were higher. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
In an address Monday to the National Association for Business Economics, the Federal Reserve chairman said that while recent jobs data have been positive, "the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion."
Futures edged higher during Bernanke’s speech, as his comments suggest the central bank is prepared to keep interest rates low for an extended period of time.
A report on pending home sales is due later Monday, following a number of reports on the housing market last week, which provided a mixed picture of the sector. The housing market remains a source of worry despite other indicators suggesting the broader economy is improving.
U.S. stocks closed slightly higher Friday after moving unevenly throughout the day, but the Dow and S&P 500 both closed the week down. Only the Nasdaq was able to claw out a weekly gain.
Investors’ enthusiasm was dampened by a series of dour economic reports out of China that underscored concerns about slower growth in the world’s second largest economy.
Despite the off week, the S&P 500 is up 11% for the year while the Dow is 7% higher. The Nasdaq is up nearly 18% in 2012.
World markets: European stocks were mixed in afternoon trading. Britain’s FTSE 100 () shed 0.2%, the DAX () in Germany gained 0.6% and France’s CAC 40 () was flat.
Asian markets ended little changed. The Shanghai Composite () and Japan’s Nikkei () added 0.1%, while the Hang Seng () in Hong Kong was flat.
Economy: Pending home sales for February are expected to have increased by 0.5%, after ticking up by 2% in January, according to a survey of analysts by Briefing.com.
Companies: Shares of Lions Gate Entertainment () were up more than 9% in premarket trading after a gangbusters opening weekend for the studio’s post-apocalyptic teen death match film "The Hunger Games."
BATS Global Markets, an equities and options exchange operator, started trading Friday at $15.25, after pricing its initial public offering at $16, the low end of its estimated range.
BATS: Well, this is awkward
Trading was halted in late morning, however, as the exchange said it was investigating system issues, and by day’s end, BATS announced it had withdrawn its IPO.
A BATS spokeswoman said Friday that the company had no further plans to go public at present.
Currencies and commodities: The dollar strengthened against the euro, the British pound and the Japanese yen.
Oil for May delivery slipped 11 cents to $106.76 a barrel.
Gold futures for April delivery fell $2.30 to $1,660.10 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.28% from 2.24% late Friday.
World stock markets were mixed Monday as doubts about Greece’s ability to follow through with tough economic reforms required under an international bailout overtook good news about the U.S. economy.
Benchmark oil rose fell below $107 per barrel while the dollar was higher against the euro but lower against the yen.
Britain’s FTSE 100 fell 0.4 percent to 5,941.15. Germany’s DAX dropped 0.6 percent to 7,114.64 and France’s CAC-40 lost 0.7 percent to 3,568.63.
Wall Street was poised to fall, with Dow Jones industrial futures down 0.3 percent to 13,130 and S&P 500 futures slipping 0.3 percent to 1,294.30.
Debt-loaded Greece recently qualified for a second multibillion dollar bailout after its private creditors took significant losses on their bond holdings to avoid losing even more money in a Greek bankruptcy. Now, new doubts are emerging about whether Greece will be able to deliver on austerity promises that were part of the bailout deal.
“Officials remain concerned about the ability of Athens to politically deliver on the tough economic-overhaul policies, especially considering that the forthcoming elections in Athens may mean new leaders aren’t as committed to reforms,” Stan Shamu, market analyst with IG Markets in Melbourne, Australia said in an email.
In Asia, Hong Kong’s Hang Seng Index fell 1 percent to 21,115.29 as falling home prices in China and its weak trade in the first two months of 2012 kept investors’ verve in check.
New home prices dropped in 45 Chinese cities in February, the official Xinhua News agency said, the result of government policies intended to cool property speculation.
Evergrande Real Estate Group lost 3.7 percent, and Industrial & Commercial Bank of China, the world’s biggest bank by market value, lost 1.5 percent.
Further evidence from the U.S. last week that its economic recovery is gaining strength buoyed stocks elsewhere in Asia. The U.S. is a crucial market for the region’s exporters.
The Dow Jones industrial average is up 8.3 percent this year, and the Nasdaq on Friday broke through 3,000 for the first time since the dot-com days more than a decade ago.
Japan’s benchmark Nikkei 225 finished higher for the fifth session in a row and recorded its highest close since a disastrous earthquake and tsunami on March 11, 2011. The index gained 0.1 percent to 10,141.99.
South Korea’s Kospi index added 0.6 percent to 2,047 and Australia’s S&P ASX/200 rose 0.3 percent to close at 4,290.80. Benchmarks in Singapore, Taiwan and Indonesia fell.
In mainland China, the benchmark Shanghai Composite Index gained 0.2 percent to 2,410.18. The Shenzhen Composite Index rose 1.1 percent to 993.75.
Benchmark oil for May delivery was down 32 cents to $106.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.95 to finish at $107.06 per barrel.
The euro fell to $1.3153 from $1.3171 late Friday in New York. The dollar fell to 83.08 yen from 83.36 yen.
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First-time claims for unemployment benefits ticked higher last week, slightly dimming prospects for Friday’s employment report.
The Labor Department reported Thursday that 362,000 people filed for initial unemployment benefits in the week ended March 3, up from the previous week’s revised 354,000 claims.
Economists surveyed by Briefing.com had predicted 355,000 new claims would be filed.
About 3.4 million people filed for their second week of unemployment benefits or more in the week ended Feb. 25, the most recent data available.
Jobless claims are considered a key indicator of the job market’s strength. The number can be volatile from week to week, so economists often look to the four-week moving average as a broader gauge.
Lately, that figure has been on a gradual decline. But last week it rose slightly to 355,000, up from the previous week’s average of 354,750.
The worse-than-expected report on initial claims comes one day before the government’s monthly employment report is scheduled to be released.
A CNNMoney survey of 19 economists predicts that the economy added 210,000 jobs in February, down from January, when 243,000 jobs were added to payrolls.
Most of the gain will likely come from the private sector, where the prediction is for an addition of 225,000 jobs.
The unemployment rate is expected to remain unchanged at 8.3%
Netflix’s key contract with Starz expired on Tuesday, causing a massive hit to its instant streaming catalog of movies and TV shows.
Pay-cable network Starz struck a four-year licensing deal with Netflix back in 2008. Netflix had been trying for months to negotiate a new contract, but talks fell apart back in September.
The Starz contract officially expired on February 28, so titles such as "Toy Story 3," "Scarface" and "Young Frankenstein" are no longer available on streaming from Netflix.
A significant amount of Starz’ content catalog is Disney (, Fortune 500) films, though it includes licensed titles from several other studios. Netflix spokesman Steve Swasey would not confirm how many titles were pulled.
Swasey implied that Netflix will be able to get some of those titles back by striking deals with other cable networks, saying that "only about 15 Disney titles are really non-replaceable."
"There’s always an ebb and flow of title availability, and there always will be," Swasey said. "There’s never a shortage of stuff. You’ll see more titles soon."
As of January, Starz content accounted for 2% of viewing time, Swasey said.
Still, the loss highlights two major problems for Netflix (): a streaming catalog that some customers complain is lackluster, and the increasing costs of content.
Before the talks fell apart last year, Netflix called the Starz contract "one of our most important deals" — because it was one of the few that gave Netflix streaming access to relatively recent movies.
Because Starz has licensing deals with several major movie studios, Netflix was able to piggyback on the arrangements and boost its catalog of recent releases.
Starz said it ended the contract talks because of "our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content."
Meaning: Starz wants more money. Netflix was able to score cheap contracts years ago, when streaming video hadn’t fully broken into the mainstream. Now that streaming video is so popular, providers are upping the price tag for their content.
Those increasing costs have set off a vicious cycle. In order to offset content charges, Netflix began charging separate prices for its DVDs-by-mail and streaming video plans in September 2011.
That raised the cheapest-possible bill for customers who want both services from $10 to $16 a month. Outraged customers left thousands of comments on Netflix’s blog, and in the third quarter of 2011, the company’s U.S. subscriber base fell for the first time in years.
Millions of customers stayed on, but some have complained of a too-small streaming catalog. Outright loss of content, like the Starz expiration, leaves angry customers asking why they’re paying more for less.
Netflix has been striking other deals to beef up its catalog. Last week, the company announced a multi-year agreement to get Academy Award-winning titles "The Artist" and "Undefeated," as well as other movies from The Weinstein Company.
Netflix is making an even bigger bet on TV, including studio-like moves. Last year Netflix licensed its first original series, "House of Cards," which stars Kevin Spacey and is due out in late 2012. In November, Netflix announced it would release a new season of the cancelled "Arrested Development" in 2013.
Meanwhile, studios now have a bargaining chip in the form of Netflix’s competitors. Beyond direct rivals like Hulu and kiosk service Redbox (owned by Coinstar ()), big tech players like Amazon (, Fortune 500) and Google (, Fortune 500) are jumping into the streaming game.
Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.
Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.
The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009.
Daniel Macias is the face of Silicon Valley seldom seen by those who don’t live there.
When he was 19, he wasn’t starting what would become one of the world’s most successful tech companies, like Mark Zuckerberg did at that age when he founded Facebook. Macias spent his 19th birthday behind bars, where he’d been sentenced for assault.
Now 20, Macias spent a recent day learning to build houses as part of a construction job training program near Facebook’s headquarters. He hopes to join the carpenters union when he finishes the program.
“If I wasn’t going to school, I would have been in the streets,” Macias said.
Money and jobs abound in Silicon Valley for people with the right high-tech or business skills. For those who don’t, the Great Recession has meant the same challenge as anywhere else in the country.
Facebook moved into its new offices on the former campus of Sun Microsystems along San Francisco Bay not long before announcing plans for an initial public offering. Inside, employees wrestle with the enviable problem of what to do with their money once the IPO makes them overnight millionaires.
A short drive down the road, East Palo Alto saw the number of murders double from four to eight, a significant spike for a city of just 28,000 people. Average income hovers just under $18,000 annually, compared to more than $66,000 for Silicon Valley as a whole. The unemployment rate in December was 17 percent, compared to 8.3 percent region-wide.
Those disparities stem in part from the complicated histories of the small cities that span the Highway 101 corridor threading through the heart of Silicon Valley, and in part from national economic trends that have spared few struggling communities. They also reflect some changes unique to the most recent tech boom, fueled by social media, cloud computing and mobile apps.
As per capita income rises in region, the median income has fallen, suggesting that as some people are getting richer, more are making less. The percentage of students in Silicon Valley public schools receiving free or reduced-price lunches has increased steadily over the past several years, an indication of hard times for more families.
Data on these economic trends are collected every year in the Silicon Valley Index, compiled by local nonprofit analysts. This year’s report highlighted the recovery of the region’s high-tech economy as wildly successful companies like Facebook go on hiring sprees.
But that recovery has not had the same ripple effect on the region as a whole compared to previous tech booms, said Russell Hancock, head of Joint Venture, one of the groups behind the index.
In the past, companies like Hewlett-Packard Co. and Lockheed Martin Corp. brought mid-level jobs to Silicon Valley along with the expected science, engineering and management positions, Hancock said. But globalization has sent the manufacturing jobs overseas online pay day loans. Meanwhile, information technology has made once-plentiful clerical and office positions obsolete.
“The technologies that we invented here have actually eliminated entire classes of jobs,” Hancock said. Without those jobs, the prospects for workers without high-end tech skills have become even more challenging:
“If you took away tech, our region would look like any other region, maybe even worse,” he said.
The contrast between the haves at Facebook and the have-nots in East Palo Alto nearby has stirred some tension. City Councilman Carlos Romero is pushing for the company to do more to address traffic and the resulting air quality issues created by the influx of new workers. He also worries that especially after Facebook’s IPO, newly flush employees will start buying up the city’s relatively affordable real estate close to their offices and send housing prices spiraling higher than low-income residents can afford.
“This is not about making sure that Facebook doesn’t come into the community,” Romero said. “This is about making sure East Palo Alto is not left out.”
Nearly half of Facebook’s employees take some form of alternative transportation, and the company is placing a hard cap on the number of vehicles allowed on and off campus to keep traffic down, said Facebook spokesman Tucker Bounds. Facebook has also been working with local developers on efforts to build housing for employees on vacant land near the campus to lessen the impact on the existing housing market, Bounds said.
Facebook has initiated some outreach into the surrounding community, including support for the program where Macias is learning to be a carpenter, known as JobTrain.
Kail Lubarsky, director of marketing at JobTrain, said no graduates have gotten jobs with Facebook yet, but she said she’s working with the company in hopes of establishing an internship program. JobTrain has culinary arts training that could lead to jobs for students in Facebook’s cafeterias. But the real goal is to place students in entry-level jobs that could let them advance to join the ranks of the in-demand coders, designers and executives who thrive most in Silicon Valley.
At JobTrain, some students said they were gunning for Facebook jobs. But many said they were simply grateful for the chance to start over, to get a foothold in an economy that has challenged many of them, even in a place where on paper the recovery is in full swing.
Macias said he sees parallels between his effort to get ahead and the Facebook employees up the road, whom he sees as average people who worked hard and succeeded.
“They took advantage of opportunities,” he said.